European stocks were in the red on Tuesday, as concerns grew over the ongoing trade war between the United States and Iran, and the chances of a quick settlement between the two sides seemed to be slipping away.
The pan-European STOXX 600 index fell 0.7% to 608.19 points, amid losses across all sectors and major markets in the continent, amid a wave of risk aversion.
Germany’s DAX index fell by about 0.7% to 24,172.17 points, Britain’s FTSE index dropped 0.4% to 10,222.71 points, and France’s CAC index declined by 0.5% to 8,015.82 points.
This decline came after a new shock to the markets, following statements by US President Donald Trump, who said that the ceasefire agreement with Iran was on life support, indicating that the Iranian response to the US proposal to end the war was unacceptable.
Trump added that the current truce is incredibly weak, which increased uncertainty in global markets and pushed oil prices higher during recent trading, while Asia-Pacific markets moved mixed, while US stock futures remained near their stable levels as the market awaited inflation data.
Markets are awaiting the release of US consumer price index data for April, with economists surveyed by Dow Jones expecting inflation to rise to 3.7% year-on-year.
In Britain, the political crisis is escalating, with more than 70 Labour MPs calling on Prime Minister Keir Starmer to resign or set a timetable for his departure, following the party's poor performance in recent local elections.
These developments put additional pressure on British markets, as government bond yields (gilts) continued to rise, with the yield on 10-year bonds climbing by about 10 basis points to 5.099%.
The British pound also fell by 0.5% against the US dollar and 0.3% against the euro, while British bank stocks came under strong pressure, led by NatWest Group, Lloyds Banking Group and Barclays.
Investors also remain focused on the corporate earnings season, with several major European companies, including Siemens Energy, Munich Re and Imperial Brands, announcing their results.
